- 20 Mar
Foreign Investors Take Interest in Miami Office Properties
Foreign investors are taking an interest in Miami property, due to what experts see as a variety of reasons. Recently, Japanese company Sumitomo Corp. purchased Miami Tower for $220M, creating one of the largest real estate deals during this real estate cycle.As well, the Spanish company Ponte Gadea purchased the Southeast Financial Center for approximately $517M, breaking other price records in the South Florida area.
These deals are some of the largest in an expanding real estate market involving Miami’s downtown urban area. This increase in the market is fueled by a higher demand for Class A space within Miami-Dade, Broward, and Palm Beach counties. Class A office space refers to the quality of the property, as well as its rental price relative to the area. The vacancy rates of these types of properties are near all-time lows, which drives up interest from investors who can be limited in purchasable land and instead look to purchase existing property.
While a number of large purchases occurred in 2016, many believe that the trend will be able to continue into the current year due to the affordability of the market compared to elsewhere in the United States and the recent increase in professionals living in the downtown area. The growth of residential properties, as young professionals seek the ability to live near their job, has led to demand for office space, making the market stable for the foreseeable future.
The biggest potential issue facing foreign investors, however, is the potential for the current White House administration to influence the market through adverse policies. In particular, the renewal of the EB-5 visa program can affect the market, as well as the future supply of workers in the area. The EB-5 visa program provides investors with a green card if they agree to invest in projects and properties that will create jobs within the United States, and is slated to expire in April. If the current government eliminates or limits the program, it could have an effect on the flow of foreign investment money.
Overall, the market for office and real estate space in urban Miami is looking positive, and investors should still have little trouble finding financing for office purchases. Barring some potential unknowns in legislation, South Florida should continue to see interest from many foreign investments.
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